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Concert promotion behemoth Live Nation is contemplating ditching Barry Diller’s Ticketmaster to start its own rival ticketing service, and the idea is registering positively with Wall Street.

Shares in Los Angeles based Live Nation jumped 4.5 percent to $21.16 yesterday after Ticketmaster, the ticketing giant controlled by Diller’s IAC/Interactive Corp., acknowledged in an internal memo to its staff that it is “doubtful” it will continue to supply tickets to many events controlled by Live Nation after 2008.

Live Nation is in the midst of renegotiating its contract with Ticketmaster. The company, which is investing heavily in new digital technologies, is said to be kicking the tires on the notion of launching its own ticketing service in a bid to capture great profits from tickets and related sponsorships and marketing.

“The sticking point on this deal may have been that Live Nation either wanted to increase the percentage of tickets they wanted to sell themselves or they wanted to sell Ticketmaster tickets under the Live Nation brand,” said Ray Waddell, Executive Director of Content and Programming for Touring and Live Entertainment for Billboard.

Waddell points out that a change in ticketing partners by Live Nation would impact shows at the 40-plus amphitheaters Live Nation owns in North America as well as other events where Live Nation controls ticketing.

However it would not affect all interactions between the two companies. Many arenas around the country have direct deals with Ticketmaster. Those ticketing agreements would still be in place even if Live Nation is producing an event.

Talk of Live Nation striking out on its own comes as a growing number of tours, including Ozzfest, Bonnaroo and Lollapalooza, are bypassing deals with Ticketmaster.

Live Nation produced over 10,000 live music events last year, including concerts by the Rolling Stones, Madonna, Barbra Streisand, Dave Matthews Band and Toby Keith, and generated over $2.7 billion global live music revenues.

The move would come as a blow to Ticketmaster. Live Nation is its biggest client and its events account for a reported 17 percent of Ticketmaster’s revenues. Ticketmaster generated over $1 billion in total revenue in 2006.